REGIONAL— The state’s Public Utilities Commission, or MPUC, has approved an interim rate increase for Minnesota Power customers that is expected to increase the average residential electric bill by about eight bucks a month.
The new interim rate, which represents an 8.6 percent increase, will take effect in January and will remain in place until the MPUC rules on the company’s full rate request, submitted last month. The full rate hike, which will now be subject to review by the public, consumer groups, and several state agencies, would increase the typical customer’s residential power bill by approximately $11 per month and raise an additional $89 million in revenue for the company. As a private, investor-owned utility, Minnesota Power’s rates are subject to regulation by the MPUC, which is expected to enforce state law that limits the rate of return on investment to just under ten percent. If the MPUC ultimately approves a rate hike that’s lower than the interim increase, Minnesota Power would be required to refund the difference, with interest, to customers. A final decision on Minnesota Power’s latest rate request is expected late next year or in early 2025.
“The rate adjustment supports the rising cost of producing and delivering 24/7 electric service,” said Jennifer Cady, Minnesota Power vice president of Regulatory and Legislative Affairs. “It will also ensure the company is able to hire and retain the workforce necessary to execute innovative projects that reduce carbon, increase renewable resources, preserve reliable service to homes and businesses, and provide programs and services that help customers control their energy use and monthly bills.”
In a press statement, the company contends that the higher revenues are necessary to implement the company’s Energy Forward strategy, which calls for an aggressive transition to clean sources of power, including wind and solar. According to the company, Minnesota Power became the first utility in the state to deliver 50 percent renewable energy in 2020 and hit an all-time high of nearly 60 percent renewable in 2022, with a goal of being more than 70 percent renewable by 2030, all while safeguarding reliable service to its 150,000 customers.
“Over the last decade, Minnesota Power has transitioned to become one of the nation’s clean-energy leaders, and we are doing this in a sustainable way that always keeps our customers at the forefront,” said Cady.
Minnesota Power has already retired seven of its nine coal units and plans to be coal-free by 2035. During that transition, the company plans to add up to 700 megawatts of wind and solar power and plans to invest in energy storage technologies as soon as they are ready for market. Several such technologies are currently in development.
In the interim, the company says it is ensuring adequate supplies of backup energy through peaking plants run on natural gas.
“Not surprisingly, the transition to more renewable energy and a more reliable and resilient grid is transforming how energy is produced and delivered,” Cady said. “This proposal ensures we can make the investments needed to continue the clean-energy transition toward a carbon-free future while not losing sight of the importance of reliability and affordability. In this unique northern climate, delivering a reliable 24/7 supply of energy remains our highest priority and continues to be the state’s priority.”